Important takeouts:
Demand for Bitcoin futures continues to rise despite recent weakness in prices, indicating sustained trader engagement.
Put options remained more premium than Cole, reflecting persistent bearish sentiment among investors.
Bitcoin (BTC) fell to $109,400 on Monday, reaching its lowest level in over six weeks. The revision followed $11 billion sales by dormant whales for five years, which had been dormant for five years, with revenue spinning into ether (ETH) spots and dispersed exchanged high lipid futures.
Despite the price drop, demand for Bitcoin futures has skyrocketed to an all-time high, prompting traders to ask if $120,000 is the next logical step.
Open interest in Bitcoin futures rose to an all-time high of BTC 762,700 on Monday, up 13% from two weeks ago. Strong demand for leveraged positions indicates that traders have not abandoned the market despite a 10% price drop since Bitcoin’s all-time high on August 14th.
This is a positive indicator, but the open interest in the $85 billion futures does not necessarily reflect optimism, as long (buyers) and shorts (sellers) are consistently in line with each other. If the Bulls are leaning heavily towards leverage, a dip below $110,000 could lead to cascade liquidation.
Bitcoin Futures Premium is currently at 8% neutral from 6% the previous week. In particular, the metric has not remained above the 10% neutral threshold for more than six months. That is, even the all-time high of $124,176 could not instill extensive bullishness.
Leverage shakeout emphasizes liquidity, but raises doubt
According to Coinglass data, the blinded overdecreasing trader of recent decline has reached $284 million in the liquidation of long positions. The event showed Bitcoin remained deep liquidity even over the weekend, but the speed of executions increased doubt given the sellers’ long-standing status.
Bitcoin’s permanent futures funding rate fell to 11% after a short-lived increase. In neutral markets, rates typically range from 8% to 12%. Some of the muted emotions can be explained at $1.2 billion in net leaks from spot Bitcoin ETFs on the US list from August 15th to August 22nd.
To assess whether this level of attention is a concern, traders should research the BTC options market.
Put (selling) options are currently traded on 10% premium (purchasing) equipment. This is a clear sign of bearish feelings. Excessive fear is obvious, but it’s not uncommon following a $6,050 drop in Bitcoin prices in just two days. Market psychology may be affected by whales shifting their exposure from Bitcoin to ether, but such flows tend to stabilize over time.
Related: When price drops to $112,000, the strategy buys $357 million in bitcoin
The recent weaknesses have been heavier than emotions, but the prospect of a Bitcoin rally to $120,000 has not disappeared. Still, it is likely that sustained rises will depend on updated spot ETF influx, particularly as global growth remains uncertain. For now, the expiration date of the $13.8 billion monthly option on Friday could serve as a catalyst for investors to decide whether to re-enter the market.
This article is for general informational purposes and is not intended to be considered legal or investment advice, and should not be done. The views, thoughts and opinions expressed here are the authors alone and do not necessarily reflect or express Cointregraph’s views and opinions.
